The Money Is In The Management

Conversation regarding ACOs and even healthcare reform itself is misplaced. The well established facts are (1) more people will receive health care, and (2) the cost of healthcare will come down. It does not matter whether the stimulus is a new law or just marketplace reaction. The fact is that a healthcare system whose players are incentivized to do more with more expensive stuff is not economically sustainable or socially tolerable.

Take a look at our evolving marketplace. What’s the single most distinctive feature in healthcare, aside from inactivity? Integration. Larger hospital systems and larger medical practices, typically single specialty. Good adaptation? Maybe. It is in the short run. Single specialty aggregation is purely defensive though. It allows groups to maintain market share and to resist price compression better. But how will that allow providers to do more with less? How will that stimulate more outcome based, financial risk based care? It doesn’t. It is well established that cost and quality management demands broad spectrum system awareness….ummmm primary care physicians. The adaptation of single specialty group integration is short term. How short? Who knows? But it is clearly not as sustainable as one whose preparation for change includes primary care capabilities.

And how do hospital-based physician alliances help physicians survive and thrive? They don’t unless they have a strong primary care base, and even then it is very questionable whether hospitals will be able to utilize their PCPs and specialists in a way that rewards outcomes based, financially smart behavior. Hospitals have always been sink holes in the landscape of healthcare costs, so why jump in? Physicians need to make sure that their affiliated hospital systems have clear plans and abilities (e.g. management and good physician billing and collection experience) to deliver outcomes at the right price. Studies, however, that indicate over sixty percent of Florida hospital admissions are unnecessary are consoling in a fee for service environment, but devastating in a capitated (or other risk based) one. Physicians have to make sure the ship they book passage on can sail a long way.

And they have to make sure they are part of the right team. What expertise is there in things like IT, financial management, clinical outcomes management, and risk based contracting? You’re gonna need that!

If one believes that healthcare costs are unsustainable (this guy does) and that our entire payment system is driving that result, then the need for new payment systems is clear. And the challenge, just in terms of thinking about healthcare differently, is enormous! How do you go to work and not think “I gotta do a lot, test a lot, do lots of procedures.” How do you begin to shift? Do you shift?

The compelling answer is “YES.” Why not act now, before any law (even one dumber than the one that passed a year ago) gets passed, before our society calls the issue a failure and politicians and our neighbors demand a single payer-type system? Isn’t there a huge opportunity RIGHT NOW? You betcha.

So where is it? It’s in management. The money is in the management. The data collectors, crunchers and implementers are the new gods in healthcare. Anyone who can collect data, show what makes clinical and financial sense and then implement it will be more sought after than conflict diamonds. Show one hospital how to live in that new system, where there are more patients, but less money available, and you retire rich. Show physicians and other healthcare business people the same thing and lead change. And since physicians are busy being physicians, except for a handful of physician entrepreneurs, they’re best bet is gonna be to find good partners in “business” who embrace change and see opportunity.